Everyone knows about home loans but how many of us really bother about the type of interest rate being charged on our home loans. Banks usually come out with the best offer which is actually best only for them. If you are personal finance savvy, you would be asking them about the type of interest rate offered – fixed or floating. Fixed rate is usually higher than the floating one. There is no standard difference between these two, though. It depends on what bank thinks is more profitable for them.
A lot of banks do not even offer fixed rate loans because of the risk of rate variation in the coming years. Only select few offer fixed rate home loans. Let us check out the top 5 banks which do so:
It offers fixed rate home loans for 10 years. It has named it as Trufixed and offers it only until Jan, 2015. After 10 years, the loan will switch automatically to floating rate. The interest rate offered is between 10.25 % and 10.5% p.a. After January, it will offer fixed rate loans only up to 2-3 years with interest rates of 10.15% – 10.35%.
2) Axis Bank
Axis bank offers fixed rate home loans for longer tenure of 20 years with attractive interest rate of 10.4% p.a. However, if anytime you feel that the market rates have down drastically and the fixed rate option you have chosen would cost you more, bank provides you with two options. One, you can switch from higher fixed rate to lower fixed rate of interest on payment of a nominal switching fee. Two, you can switch from fixed rate to floating rate of interest on payment of a nominal switching fee.
3) ICICI Bank
ICICI bank has introduced a fixed rate home loan of 10 years tenure at an attractive interest rate of 10.25% , better than many competitors. After 10 years, the interest rate would be prevailing base rate plus 0.25%. It also offers fixed rate option for 1 and 2 years at 10.15% and later the rate would be base rate plus 0.15%.
4) PNB Housing Finance
PNB Housing Finance Ltd offers home loan schemes of 3, 5 and 10 year tenures. Interest rates are 10.5% – 11.25%, 10.6% – 11.25% and 10.75% – 11.25% respectively for the said tenures. After the tenure, the rate gets converted to the floating rate prevailing at that point in time. The current Floating rate offered by the company is 14.5% p.a. as per the benchmark rate, which is slightly higher than its peers.
Citibank has a special offer of fixed rate home loan at 10.1%, which is the probably the best among all its competitors. However, this is a limited offer and expires in September, 2015. After that, only variable rate loans would be available. Citibank offers semi-fixed home loan up to Rs. 75 lakhs between 1-25 years tenure. After a fixed period, the rate changes to prevailing floating rate.